Brazilian bio-input companies face challenges entering Paraguayan market

Date:08-22-2024

An increasing number of Brazilian agribusiness companies are seeking international expansion to tap into new consumer markets, boost revenue, and diversify their income sources. 

In this context, Brazilian bio-input companies face several challenges and points of attention when entering the Paraguayan market.

One of the key considerations during company formation is defining the roles of the partners: ″All corporate documentation is still physical,″ noted attorney Maite Schmitt, a partner at Auro Ruschel Advogados Associados. She said, who specializes in this area, the presence of the partner, or administrator in the neighboring country is required for the necessary signatures and for every new social documentation.

Once the company is established, one of the main legal challenges is complying with local legislation. This is because bio-input industries are highly regulated by regulatory agencies wherever they operate, Schmitt explained. 

In Paraguay, the federal body responsible for this is the Servicio Nacional de Calidad y Sanidad Vegetal y de Semillas (SENAVE).

Another crucial issue, highlighted by the lawyer from Auro Ruschel Advogados Associados, is the protection of trademarks and technologies. ″There is an informal market that seeks out prominent brands in Brazil and registers them in Paraguay under local individuals' names, later selling them back to the original creators at a high price,″ the specialist warned.

According to her, when a Brazilian company attempts to file a trademark application, it often finds that the brand used for its product has already been registered under another person’s name. ″This sometimes creates a problem since the real brand creator won’t be able to use it unless they pay the local holder,″ she emphasized.

Benefits Outweigh the Challenges

Despite these challenges faced by Brazilian bio-input companies, accessing international markets offers more benefits that outweigh the hurdles. Neighboring Paraguay has become one of the most sought-after locations for Brazilian agribusiness companies to invest in new units.

″It is well known that this country still has large, productive land areas available, relatively low prices compared to neighboring countries, and a favorable climate, making it an ideal location for expansion,″ Schmitt pointed out.

Additionally, she noted that the geographical proximity and favorable conditions for agricultural production have opened doors for Brazilian entrepreneurs to enter the Paraguayan agricultural sector. Various business sectors have already recognized this opportunity, from land acquisition to the commercialization of inputs and final products. Moreover, international operations can increase a company’s competitiveness by exposing it to new competitors and higher standards, fostering innovation and efficiency.

″International presence strengthens the company’s brand, making it more recognized and respected globally. This naturally facilitates the formation of strategic partnerships and alliances with local companies in other countries,″ the attorney highlighted.

With extensive experience in providing legal counsel to companies during the internationalization process, Schmitt pointed out that opening a company in the country or region where products are already being sold offers numerous advantages. One such advantage is easier access to local resources, technologies, and knowledge that may not be available in the domestic market.

Another important factor, according to the specialist, is that companies expanding their international presence can significantly reduce operational costs. ″In the agribusiness sector, it is often necessary to have headquarters in the location where the product is registered in order to commercialize it,″ she emphasized, referring to input industries.

Attorney Schmitt strongly recommended having specialized legal counsel when considering company internationalization. She believed, the work began with defining the strategy in collaboration with the client, including deciding on the country chosen for expansion.

″Each location has a unique set of laws and regulations governing agribusiness, from land acquisition to environmental and labor issues. Our firm has trusted local law firm partners, ensuring our clients that their company complies with all local regulations and that all procedures and documents are handled correctly according to local legislation,″ she said in conclusion.

(Editing by Leonardo Gottems, reporter for AgroPages)

---